This is how you can get Collateral Free Loan for Business | Startup | Sarthak Ahuja [Video]

The govt offers collateral free loan for MSME Businesses that most people don’t know of…

What kind of seed capital do most businesses in trading, services, or small scale manufacturing require to start up?

Unless you’re trying to build a business with a long gestation period like a tech startup that takes over 5-7 years to turn profitable, most traditional small businesses don’t need more than Rs 10-20 lakhs of capital to start.

The founder in most cases starts off by having Rs 5-7 lakhs of their own saving, and then hopes it would be great if they could take another Rs 10 lakhs for inital capital investment in doing up an office space, a website, and some working capital.

And the government provides a loan of Rs 10 lakh without any collateral to promote entrepreneurship in the country.

It’s done through the Mudra Scheme where business loans of up to Rs 10 lakhs are disbursed through all public sector and most private sector banks in the country.

It’s available in the form of term loan to purchase a capital asset or in the form of working capital or overdraft facility to buy inventory.

The tenure for a term loan is up to 36 months, and the interest rate varies from 8% to 12% p.a. based on the borrower’s credit worthiness and details of the business.

The documentation required is limited compared to other types of loans, and applications can be made on udyamimitra.in or through your local bank branch.

In FY 2022-23, the most amount of disbursals were done by –
– IndusInd Bank
– Bandhan Bank
– SBI / Canara / PNB

The states with the largest disbursals were:
– Bihar
– Tamil Nadu
– West Bengal
– Karnataka
– Maharashtra

Details of states and banks given only as a data point on where the implementation of the scheme has been the best in a recent year.

I hope this information helps someone who is looking to build a small profitable business and an additional Rs 10 lakhs in debt with a suitable moratorium would be helpful for them to get started.
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A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.

Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of ’17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.